Defendants Received More Than $8 Million by Selling Secretly Acquired Stock

WASHINGTON – Ira W. Gentry Jr. of Scottsdale, Ariz,. and Randy W. Jenkins of Glendale, Ariz., were convicted of securities and tax fraud relative to an elaborate scheme to defraud UniDyn Corporation’s investors, the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) and the Justice Department announced today. UniDyn, based in Phoenix, is a manufacturer of engineered production equipment and of testing equipment, principally for the electronics industry and the quality assurance testing market.

After a four week trial and two days of deliberation, a federal jury in Arizona found Gentry guilty of 33 counts, including conspiracy, tax evasion, wire fraud, securities fraud and money laundering, but acquitted him of one count of wire fraud and two counts of money laundering. Jenkins was convicted on 21 counts, including conspiracy, tax evasion, wire fraud, securities fraud and money laundering, but acquitted of one count of wire fraud and three counts of money laundering.

According to the indictment and evidence presented at trial, Gentry was the CEO and a member of UniDyn’s board of directors. Gentry conspired with Jenkins, a disbarred Arizona attorney, to secretly acquire approximately 20 million shares of the company’s stock. They then artificially inflated the value of the stock through the filing of misleading UniDyn SEC filings, through the filing of false corporate income tax returns and through the issuance of false and misleading press releases. To conceal their activities, Gentry and Jenkins used aliases, offshore nominee entities, Canadian brokerage accounts, nominee bank accounts and false tax identification numbers.

Between December 1997 and April 2003, Gentry and Jenkins sold more than 3.9 million shares of UniDyn common stock held in nominee names for more than $8 million, according to the indictment and evidence at trial. Gentry and Jenkins used the illegal proceeds to purchase assets in the name of nominee entities including a $1.2 million Scottsdale residence, a $139,000 Mercedes, a $62,000 custom Trans Am and $300,000 in gold and silver coins. Neither Gentry nor Jenkins reported the income they earned from the stock sales to the IRS, or paid taxes on the unreported income. The tax loss associated with the scheme is more than $1.5 million.

"As this conviction shows, defendants who believe that they can commit securities and tax crimes and run and hide behind offshore accounts and false corporate identities are living on borrowed time," said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. "The long arm of the United States justice system will track them down, prosecute, convict and seek to imprison them as well as recover their ill-gotten gains."

"Public stockholders put their trust in the hands of those at the top of their companies. Working together, these two artificially manipulated the markets and defrauded investors for their own personal gain," said Diane J. Humetewa, U.S. Attorney for the District of Arizona. "They are now held accountable after a complex, investigation lasting over 8 years. We appreciate the help received by IRS investigators and the Department of Justice Tax Division."

"These two people were convicted for their role in a creative and complicated scheme to illegally enrich themselves, but as in other cases, IRS Criminal Investigation special agents successfully demonstrated their financial investigative skills by following the money trail," said Eileen Mayer, Chief, IRS Criminal Investigation.

U.S. District Judge Susan R. Bolton scheduled sentencing for both defendants on Dec. 15, 2008. Gentry faces a maximum sentence of 600 years in prison and fines of $54.5 million. Jenkins faces a sentence of up to 370 years in prison and fines of $18.25 million. In addition, Judge Bolton has scheduled a hearing for Sept. 23, 2008, to resolve forfeiture allegations regarding an automobile and interests in an oil-drilling operation.

Assistant Attorney General Hochman commended the IRS Special Agents in the case, as well as Tax Division trial attorney Michael Vasiliadis and Assistant U.S. Attorney Frank Galati with the District of Arizona, who prosecuted the case.

More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax.